Government Relations

Government Relations Legislative Update

Monday, February 4, 2013

Federal Update for February 4, 2013

Washington policymakers appear increasingly resigned to allowing the large across-the-board cuts in defense and nondefense discretionary programs under the sequester to go into effect on March 1. In order to prevent the sequester, Republicans remain adamant that the cuts be replaced by other spending cuts and entitlement reforms, while Democrats insist that any alternative package include new revenues. As National Journal points out, "once unthinkable, draconian cuts designed to force a more reasonable compromise may be much harder to undo than anyone ever imagined."

The White House continues to oppose the sequester, but it has not yet signaled publicly the level of political effort it will exercise to prevent it. In the Senate, Appropriations Committee Chair Barbara Mikulski (D-MD) said she will "do everything I can to have a balanced approach to vitiate sequester," and is planning a hearing on February 14 to discuss the consequences of the sequester.

The original estimated across-the-board cuts in FY13 under the sequester were 9.4 percent for defense discretionary spending and 8.2 percent for nondefense discretionary spending. The fiscal cliff agreement signed on January 2 lowered those percentages to an estimated 7.3 and 5.1 percent, respectively. However, a memorandum prepared by Senate Budget Committee Chair Patty Murray notes that because the cuts would be absorbed over the last seven months of FY13, "the impact of the cuts will generally not be less dramatic."

UW System President Kevin Reilly, UW Chancellors and UW Colleges Deans wrote to Wisconsin's congressional delegation outlining a range of issues should automatic spending cuts to key education and research and development programs take effect. See the letter here.

Immigration reform rose higher on Washington's agenda. On January 28, a bipartisan group of influential Senators—dubbed the "Gang of Eight"—released a set of principles for comprehensive immigration reform, which they said they hoped would be able to pass as legislation later this year. The following day, President Obama announced his own set of principles for immigration reform, noting that he had his own bill prepared in case the House and Senate appeared to be delaying action.

Senator Charles Schumer (D-NY) said on January 30 that Senator John McCain (R-AZ) was taking the lead in drafting a bill that he hoped could be marked up in the Senate Judiciary Committee and passed by the full Senate in late spring, CQ.com reports. Senator Schumer added that once the bill hits the Senate floor, it could require three to four weeks of debate.

A bipartisan group in the House also is developing a set of proposals, reportsPolitico, which the Members hope to announce sometime close to the President's State of the Union address on February 12.

Both the Senate Gang of Eight's and the President's sets of principles offer a separate path to citizenship for young people brought to this country illegally as children (that is, the DREAM Act) and would give green cards to international students earning advanced degrees in science, technology, engineering, and mathematics (STEM) fields so they could remain and work in the United States. Neither plan explicitly calls for expanding the number of non-immigrant, H-1B visas for high-skilled workers, which are used by companies to hire highly educated foreign professionals short-term for specialty positions and by universities for international researchers and scholars.

The high-skilled visa issue was addressed on January 29, however, by a bipartisan group of four Senators who introduced the Immigration Innovation Act of 2013. Reflecting ideas strongly supported by the high-technology industry, the bill would make a number of changes in visa policy, including raising the annual number of H-1B visas for high-skilled workers from the current 65,000 to 115,000, with a "market-based" escalator clause to adjust the numbers to reflect needs of the economy. As with the President's proposal, the bill would use fees paid by employers to support U.S. science education.

Among the visa changes important to universities, the measure would exempt from the H-1B visa cap outstanding professors and researchers, persons with extraordinary ability, and those with U.S. STEM advance degrees, among others. It also would allow employment for dependent spouses of H-1B visa holders. Senator Chris Coons (D-DE) said of the bill, "It is my hope that this legislation finds a home in the balanced immigration reform package ultimately considered by the Senate this year."

The House Science, Space, and Technology Committee will hold a hearing February 6 on the role of research and development in U.S. competitiveness. Among those testifying are Rich Templeton, chief executive officer of Texas Instruments and chair of the Task Force on American Innovation; Shirley Ann Jackson, president of Rensselaer Polytechnic Institute; and Charles Vest, president of the National Academy of Engineering.

The White House Office of Management and Budget (OMB) published in the Federal Register the long-awaited "Omni Circular" that consolidates cost principles and administrative requirements for federal research grants and cooperative agreements and proposes modifications to several OMB grant circulars, including Circular A-21. OMB is providing a 90-day comment period.

The Omni Circular would consolidate existing OMB grant circulars, such as A-21 and A-87, which guide federal assistance and grants to universities, other nonprofit organizations, and states and localities. The circular includes specific modifications to current cost principles and administrative requirements for university research grants under OMB Circular A-21.

The proposed guidance addresses several issues that have been raised by the university community in an effort to improve efficiency, including:

Allowing grantees to direct charge certain administrative support and computer costs; and

Addressing agency exceptions to the use of negotiated cost rates.

Among the most controversial changes OMB originally proposed was moving toward mandatory discounted or voluntary flat indirect (F&A) cost rates instead of negotiated rates. The new proposal does not contemplate a flat rate. However, it would give institutions the option to extend their negotiated rates for up to four years, subject to approval by their cognizant federal agency and assuming there had been no major changes in their indirect costs.

OMB is hosting an informational webinar on the proposed guidance with members of the grant community on Friday, February 8, at 11:00 a.m. EST. A link to the webinar will be available on the cfo.gov website; no advance registration is required. A recorded version will be available for later viewing.

The six major presidentially based higher education associations sent a letter to Secretary of Education Arne Duncan on January 24 expressing disappointment that the Department's new international education strategy report makes little mention of the Title VI/Fulbright Hays programs. Specifically, the letter notes that the "report that details the next four years of the Department's international education strategy makes scant mention of its largest and most successful international education programs, Title VI/Fulbright Hays."

(AAU and the UW System Office of Federal Relations contributed to this report.)